SBV devalues dong to underpin exports, growth
(VOV) - The State Bank of Vietnam (SBV) adjusted the VND/USD exchange rate up by one percent effective January 7 in a move aimed at buttressing exports and economic growth by increasing the purchasing power of the US dollar in the domestic market.
The average interbank exchange rate was adjusted to increase from VND21,246 to VND21,458 per dollar.
In making the announcement the SBV said the devaluation was appropriate given the developments in the global and domestic financial markets, after the exchange rate stayed unchanged for more than six months.
The adjustment is among measures being taken to give effect to the national plan for socio-economic development and State budget operations this year, following Government Resolution 01/NQ-CP issued January 3.
Many of the nation’s leading economists have welcomed the weakened dong as a positive development considering the favourable macroeconomics, monetary market and banking activities over the past year.
They said that a weaker dong reference rate is the appropriate policy to maintain exports as the engine driving the Vietnamese recovery.
They also said the move by the SBV is reasonable and in line with similar movements in other local and international currency markets such as the Republic of Korea’s Won, Japanese Yen, Philippine Peso and Thai Baht.
The adjustment helps increase the competitiveness for Vietnamese exports in the global market by making them less expensive, an economist from HCM City said, adding that on the flip side it will cause a small increase the cost of imports.
Nguyen Tuan Nam, deputy director of Muoi Day Steel Trading Co, Ltd. in turn said the cost of its imports has not been affected much.
At a recent banking conference, SBV Governor Nguyen Van Binh said that exchange rates will rise by two per cent maximum this year.
Tuesday's increase is the first adjustment of the rates in 2015.